1 Introduction

Financing the transformation of agrifood systems remains one of the most critical challenges the world faces. This challenge has been exacerbated over the 2025-2026 period with dramatic changes to the development financing landscape. Yet, the future of any country’s national security and prosperity hinges on a sustainable and resilient food supply that delivers healthy and affordable diets for all citizens. The fragility of the current agrifood systems and their failure to deliver healthy diets, operate sustainably or ensure fair conditions for those who produce food, is still not treated as a top-tier political issue. Consequently, the scale of investment needed to future-proof agrifood systems is not being made. The global food system is extremely fragile: a cascading set of climate, disease, market or geopolitical events could, at any moment, trigger widespread food security crises. With business-as-usual practices further degrading the resource base on which food production depends, risks escalate, and the poorest remain the most vulnerable.

Box 1: What do we mean by “agrifood systems”? In this report we use the term agrifood system to refer to all aspects of food production, processing, distribution and consumption, including fisheries and related non-food agricultural production – this terminology is used interchangeably with food systems, and for the purposes of this report the two terms are taken to have the same meaning.

Bringing together work done by the Global Donor Platform for Rural Development (GDPRD) over the period 2022-2026,² this background paper sets out the imperative for significantly increased investment in agrifood systems transformation and explores the emerging challenges and opportunities for donors and development partners. This paper was originally prepared to underpin discussions at the GDPRD 2024 Annual General Assembly,³ held under the theme of “Financing Food Systems Transformation and Rural Revitalization: Opportunities and Challenges”. Since the first draft, the operating environment for development finance has shifted markedly, with multilateral initiatives evolving and levels of bilateral official development assistance (ODA) tightening, even as food, climate and rural livelihood needs intensify. Against this backdrop, this updated 2026 edition synthesizes insights from the GDPRD’s recent work and the latest literature, to identify ways forward that emphasize strategic coordination, smarter use of public resources, and the catalytic power of innovation to leverage additional finance. The core message remains: agrifood systems are central to economic stability, climate resilience, health and global security. In a constrained financing environment, well‑targeted catalytic finance – paired with policy and market reforms – offers the highest return for long-term, systemic impact.

Providing a background perspective. This report is intended to provide a broad background perspective on the importance, opportunities and challenges of financing agrifood systems transformation. It outlines the overall challenge, explores the basics of development finance and the sources and scale of finance for agrifood systems, looks at emerging innovative and blended financing mechanisms, and outlines ways forward. One difficulty in sourcing finance for agrifood systems is a lack of understanding about the sector from the finance sector, and lack of understanding about the finance sector from agrifood specialists. In part, this report is an attempt to close this gap. As a background report this analysis is intended to complement the other work and reports of the GDPRD on the topic, and provides context for the Platform’s 2026 work on analysing return on investment (ROI) in agrifood systems. This report draws on a literature review of recent reports and studies on financing for agrifood systems and rural development, a webinar series organized by the GDPRD on critical issues in agrifood systems financing, and a series of key informant interviews with experts, practitioners and development partners from across the public and private sectors. These interviews were conducted under Chatham House Rules to encourage open discussion; accordingly, individual participants and their affiliations are not identified in the report.

Financing for development has reached a critical juncture. Despite ODA increasing to its highest level in 2023, at US$223.3 billion, progress on major development priorities remains significantly behind expectations.⁴ That historic high proved short-lived: the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) ODA fell by 6.0 per cent in 2024 and then by a further, record 23.1 per cent in 2025, to US$174.3 billion – the largest single-year decline ever recorded – with a further fall of around 5.8 per cent projected for 2026.⁵ Rising conflict, natural disasters, increased migration, and the lasting impacts of the COVID-19 pandemic have stretched public budgets. The 2024 Financing for Sustainable Development Report estimates that global financing gaps have escalated from US$2.5 trillion before the pandemic to US$4 trillion. The report warns that the current “business-as-usual” approach, without significant economic, social, and technological shifts, will be insufficient to meet long‑term development goals, even by 2050.⁶

While the financing gap continues to widen, millions of people around the world are facing debilitating poverty and inequality, with food insecurity, hunger and malnutrition rising at alarming rates. The United Nations’ State of Food Security and Nutrition in the World 2026 (SOFI) report (see full citation in footnote 1) estimates that in 2025, 7.8 per cent of the world’s population faced hunger, down from 8.6 per cent in 2022. Globally, an estimated 25.8 per cent of the world’s population – about 2.1 billion people – were moderately or severely food insecure. Access to safe and nutritious food continues to be out of reach for millions, especially women and children in rural and conflict-affected parts of the world. The report draws urgent attention to the need for governments, donors, the private sector and other actors to accelerate and scale up financing and investments towards ending hunger, malnutrition and food insecurity.

Meanwhile, shifts in major bilateral development finance have significantly increased uncertainty. In the United States, the near-complete dismantling of the U.S. Agency for International Development (USAID) in early 2025 resulted in the termination of roughly 80 per cent of its programmes and substantial staff reductions, disrupting longstanding development and humanitarian assistance efforts. This change occurred against a backdrop of broader ODA reductions across several major donor countries. These changes have implications for food security, health and rural development programmes that have historically depended on stable bilateral support, and raise heightened importance for more catalytic, coordinated finance mechanisms.

A transformation of agrifood systems (including agricultural production, processing, transport and consumption) is essential for advancing progress across a wide range of development priorities, especially ending hunger and improving nutrition. Over three billion people globally depend on agrifood systems, at least in part, for their livelihoods,⁷ and these are mostly the poorest people in societies. Agrifood systems are also – according to the SOFI 2024 report – not delivering affordable diets for over a third of the world’s population,⁸ food insecurity is rising and escalating levels of overweight people and obesity risk massive future health costs for society. Furthermore, agrifood systems contribute about a third of greenhouse gas emissions⁹ and agricultural production is the biggest contributor to biodiversity loss. Climate change and environmental degradation are ricocheting negatively back onto the world’s ability to ensure food security and reduce poverty, resulting in increased extreme weather events, natural disasters, and declining agricultural land productivity.

The gravity of this situation calls for a profound rethink of how limited ODA can be used more catalytically. Conventional approaches that channel donor funding are fragmented, individual projects at the country level only have a marginal impact, and will not lead to the scale of systemic and structural change needed to transform agrifood systems and create more prosperous and resilient livelihoods for rural communities. Financing must be more significant, robust and catalytic to meet the scale of development challenges, and create a just and resilient response to climate change. It also requires a fundamental rethinking of how ODA and development finance can dovetail with public and private sector funding to support country-level transformation pathways more efficiently. Addressing fragile and conflict-affected areas is an especially urgent challenge in this context.

A positive narrative of the return on investment in agrifood systems is required. The challenges facing agrifood systems have been well articulated as have the costs of bringing change. However, to mobilise investment from national governments and the private sector a more positive narrative on the potential returns from investing in agrifood systems is required. Presenting the agrifood sector as a “costly problem” to ministers of finance or institutional investors is unlikely to unlock the required investments. In this light, GDPRD is current working on a how returns on investment in agrifood systems could be better articulated using a multi-dimensional framework across economic, social, environmental and resilience factors.

Development finance and ODA are in a state significant flux, and the changes over the 2025-2026 period have not yet been fully captured in official statistics. Consequently, this report is largely based on data prior to 2025. However, understanding the relative scales of financing for agrifood systems and the costs of transformation from this earlier data remains highly relevant today. It is clear that the financing situation will have worsened, making the key messages from this report even more important.